A slight decline in nonwovens sales was mainly attributed to divestitures and economic factors, for roll goods producer Lydall, Inc., Manchester, CT. The company’s roll goods sales decreased to $120 million last year compared to $130 million in 2000. Despite this decrease, Lydall has been able to achieve significant growth in its core areas, Filtration/
Separation and Thermal/Acoustical. The two segments represent approximately 86% of the company’s overall sales, compared to 61% in 1998, when Lydall strategically decided to focus on these two core areas.

“We have seen 40% growth in our two core areas since 1998,” explained president and chief executive officer Christopher Skomorowski. “This shows that what we set out to do is working.”

As part of the aforementioned strategy, Lydall divested its non-core businesses in 2000 and in early 2001. Accounting for approximately one-third of Lydall’s total business, these divested assets include the Southern Products Division, the Gerhardi chrome plating and injection molding operations, a composites materials plant and a boxboard business. Now that the divestment process is complete, Lydall is focusing on product development to further boost its two core segments. In 2001, approximately $26 million of the company’s total sales of $224 million were generated through the sale of products that did not exist three years ago.

On the nonwovens side of the business, one new product seeing a great deal of activity is the ActiPure liquid filtration product used in home filtration devices. This carbon filter is reportedly used in Cincinnati, OH-based Proctor & Gamble’s Pur drinking water filtration system. On the industrial side of the business, Lypore XL high performance filtration media is finding application in hydraulic applications and fluid power where cellulose has traditionally been used.

Turning toward the automotives segment, which forms the bulk of Lydall’s Thermal/Acoustical segment, one new product is Zero Clearance, a needlepunched composite structure containing polyester, glass and aramid fibers. This “peel and stick” product reportedly eliminates attachment points under the body of the vehicle.

Speaking of the company’s automotives business, this segment continues to comprise 78% of the Thermal/Acoustical group or 45% of overall sales for Lydall. In recent months, this market has been characterized by fewer builds and increased competition, but Lydall has remained competitive by offering a total system solution for automotives with its products being used in more areas of the car than ever before.

Lydall’s automotives segment has also received a boost from the construction of a 86,000 square foot facility in St. Johnsbury, VT, completed last year. The new facility was built in response to new business generated through contracts with several leading automobile manufacturers. Lydall also expanded its automotive facility in Hamptonville, NC last year to accommodate production of dB Core, an acoustical nonwoven material that achieves superior sound abatement levels without noxious odors or environment containment problems.

Despite its long standing success in the automotives industry, Lydall executives are striving to become less reliant on the market. This goal, however, would not be achieved by decreasing the company’s automotives business. Instead, Lydall will focus on boosting its business in other segments through both external and internal growth. “We are always looking for possible acquisitions in the non-automotives segment, “ Mr. Skomorowski explained. “While nothing is imminent, we always consider acquisition as a way to boost our industrial thermal/acoustical or filtration/separation business.”

Turning to the Filtration/Separation segment, the group’s sales continue to increase. Because the segment continues to be the smaller of Lydall’s two core businesses, executives view it as a prime area for growth. In addition to the new products mentioned above, this segment is benefiting from an expanding customer base both in the U.S. and Europe as well as new technology developments related to melt blown nonwovens.

Earlier this year, Lydall completed a project that both improved its melt blown technology and boosted its European business when it upgraded two melt blown lines housed in its Rochester, NH facility. While one of these lines remains in New Hampshire to serve Lydall’s U.S. customer base, the other was relocated to the company’s site in Saint-Rivalain, France. “We are serving similar customers in the U.S. and Europe,” Mr. Skomorowski explained, “so we decided to relocate. We are now saving shipping costs while better positioning our melt blown product line in France.” The Saint-Rivalain site also produces Lydall’s Lydair high efficiency air filtration media.

Lydall’s commitment to the European market does not end with its new melt blown line in France. While only a small portion of the company’s current sales are conducted in Europe, the strength of the European automotive market as well as other economical factors continue to make the continent a potential growth area for Lydall. In Asia, the economic picture is not as rosy in the short term. Despite this, Lydall is expanding its position beyond the Japanese sales office. A business center is being established in Taiwan to support both the existing and developing customer base across the filtration/separation and industrial thermal solution businesses.

In terms of overall sales strategy, one area of continued interest for Lydall is the internet. After redesigning its corporate website, www.lydall.com, in January 2001, the company took its first try at direct consumer sales in May when it launched www.coolandquiet.com, an e-commerce site targeting consumers in the car restoration market. Included in the products for sale on this site are Zero Clearance, Lydall’s LyTherm composite material for thermal and acoustical applications and dblyte. The website marks not only Lydall’s first entry into e-commerce but also its first move into direct retail sales. “This is a market where people haven’t had an opportunity to buy these products directly,” Mr. Skomorowski explained. “Right now it makes a lot of sense for us.”

While it’s too early to gauge whether or not direct to consumer e-commerce will be successful for Lydall, the company is focusing on new products and new markets for future growth. This and a possible acquisition in its non-automotive segments could add up to a strong future for Lydall.

Increased focus on foreign markets, particularly in Europe and Asia, stepped up product development efforts and a look at spending practices are three of the core principles that should guide Lydall, Manchester, CT, toward future growth. The company has been able to significantly increase sales in its core segments during the past several years, despite economic difficulties, and sees no reason why this growth shouldn’t continue.

With a new CEO in place—David Freeman, a Lydall board member since 1998, who was named to the position in July 2003—Lydall has been focusing on streamlining its administrative costs to free up funds for its research and development and sales and marketing efforts. “Organic growth is a strong priority for us,” Mr. Freeman explained. “We are hoping to expand our efforts to bring new technologies into existing operations and markets.”

Former CEO, Christopher Skomorowski has been named chief operating officer. He and Mr. Freeman will work together to focus on growth opportunities for the company.

In recent years, acquisitions have proved profitable for Lydall as it has grown its business from two core markets—thermal and acoustical and filtration and separation. In 1998, when the company announced its intention to focus on these two areas, they together represented about 61% of sales. Today, the two comprise 89% of Lydall’s business, and company executives are still eyeing growth in these segments, which together achieve sales of about $224 million a year. Mr. Freeman said that an ideal acquisition that complements existing technology, in one of the two core areas, would be ideal for Lydall’s future. “Lydall has had some good acquisitions in the past,” he added. “This is a good way of growing and bringing new technology into existing operations and markets.

Currently, thermal/acoustical is the largest of the two segments, representing about 60% of overall sales. Of these, the bulk can be attributed to automotives where the company develops acoustical and insulation products. This segment has continued to perform well for Lydall both through increased marketshare and new applications in the segment. Smaller areas for the thermal and acoustical segment, such as duct liners in commercial buildings, have been negatively impacted by the soft global economy.

Lydall’s automotives business has been boosted by two major product introductions in recent years. Manufactured in Hamptonville, NC, ZeroClearance is a composite peel-and-stick product comprised of high performance aluminum sheeting in varying thicknesses, a mechanically needle­punched, pre-shrunk, polyester-based composite and a unique, high-temperature, pressure-sensitive adhesive on the back of the attachment. They can provide thermal protection independently or can act as a component of complete systems to enhance performance in certain trouble areas. By combining the thermal reflectance of an integrated thermal layer with the inherently low thermal conductivity of the core material, ZeroClearance acts as both a radiation and conduction barrier.

Additionally, dBCore is an acoustical nonwoven material that achieves superior sound abatement levels without noxious odors or environmental containment problems. This material is seeing a great deal of use as tunnel insulators for transmissions in trucks and sports utility vehicles. Lydall currently sells dbCore, which was launched last year, in the U.S., but plans are underway for a European rollout. If this roll out is as successful as expected, a European production line would likely follow ensue, according to Mr. Skomorowski. “We’ve been picking up share piece by piece in Europe, across all of our businesses,” he explained. “It’s becoming more and more important to us.”

Meanwhile, the company’s smaller segment, filtration, has been boosted by efforts into carbon wrap filters—for water filtration—and diesel filtration—for smaller particle size filtration. These new products are outpacing growth in Lydall’s more traditional product line, such as microglass filtration media, which is growing 4-5%annually . In the future, executives expect to see more growth come from the liquid side of the business.

The boost that new products have given Lydall is significant, accounting for 15% of total sales in 2002, and it is no wonder why Lydall executives are shifting more resources on new product development. Clearly, they are the means by which future growth will be achieved.

“We have really tried to be driven by the needs of the marketplace,” Mr. Freeman explained. “When you know where the market is going, it is easier to find growth opportunities.”

Currently about $90 million of the company’s total sales of $253 million are related to its nonwovens business. Of these sales, about one-third are conducted outside of the U.S., mainly in Europe and Asia.

As part of its effort to drive sales in Asia, Lydall has recently opened a business center in Taiwan, which will provide sales, marketing and technical support in the region. “This will provide us with a window into the Asian market and allow us to see the benefits and disadvantages of doing business in the region,” Mr. Freeman explained. “We consider it a prudent way of entering a market.”

Lydall’s previous efforts in Asia consisted of a sole sales office in Japan. Recent market shifts, however, have necessitated a presence on mainland China, where executives predict sales to double within the next several years. If the business center proves Asia is an important part of Lydall’s business, a manufacturing presence there could be next, according to executives.

In Europe, Lydall’s Saint-Rivalain, France site continues to be important, supplying goods globally. Thanks to the relocation of a meltblown line—formerly housed in Rochester, NH—in early 2002, France now holds the same capabilities as Lydall’s U.S. operation. The only difference in the U.S. lines is they can run faster, something that Lydall will change through capital improvements in upcoming years.

Looking ahead, streamlining administrative costs will be the first step in boosting Lydall’s profitability. The company has already finalized a plan to consolidate its Charter Medical business, a manufacturer of products designed to manage vital fluids in the blood and biopharmaceutical industries, and subsequently save costs. The company is now closing its Lakewood, NJ facility, an initiative announced in April. The operation will be consolided into Charter Medical’s Winston-Salem, NC site. Officials indicated that costs of $600,000 associated with the plant closing will be recouped in operating and administrative efficiencies within the first year of the consolidation.

“We are examining the expenses of our business and trying to streamline the administrative side,” Mr. Freeman said. “This will help us achieve our number one priority—organic growth—in the future.”

Location: Manchester, CT

Sales: $98 MILLION

Description: ﻿Key Personnel
W. Leslie Duffy, chairman of the board, David Freeman, president and CEO; Christopher Skomorowski, executive vide president and COO

Sales at Lydall Inc. were positively impacted by increases in air and liquid filtration products; strength in passive insulation products and other new products and markets entered by the Manchester, CT-based company. Negative effects included declining sales in traditional blood filtration media.

Lydall continues to operate much of its business through two core areas Filtration/Separation and Thermal/Acoustical. Filtration/Separation has been boosted by growth in liquid as well as the introduction of new synthetic air and liquid filtration products; Thermal/Acoustical growth has been driven by a strategic focus on the appliance market.

In 2003, Lydall, which once operated through a series of subsidiaries, streamlined into one company referred to as One Lydall. “We are opening lines of communication and look forward to expanding opportunities for growth,” said David Freeman, president and CEO. “We formed two councils, a marketing council and a manufacturing council, operating across all of our businesses. These councils are charged with improving our sales and marketing endeavors.”

Because new products have always driven Lydall’s growth, the company increased its research and development spending 13% last year to support an extensive roster of programs. While commercialization was hampered by customer delays and market circumstances, these new products are expected to begin contributing to the bottom line by the end of 2004.

Turning toward the global picture, Lydall operates a production facility in France as well as sales offices throughout Europe and Asia. This strong network will help fuel Lydall’s growth in the future. Other growth efforts include the consolidation of its domestic automotives business and leveraging of resources. “Long term, our goal remains to sustain double-digit growth at optimum margins and we believe the efforts we have underway and the streamlining of our organization will enable us to accomplish this goal,” said Christopher Skomorowski, executive vice president and COO.

With annual nonwoven sales up 5% to $126 million in 2004, Lydall Inc., Manchester, CT, reported growth and improved profitability in many of its businesses, particularly nonwoven products. The majority of Lydall’s focus is split across two product sectors, with thermal/acoustical sales representing 66% and filtration/separation sales making up 24% of Lydall’s total business for the first quarter of 2005.

Lydall’s recent sales and profitability gains were overshadowed by the diversion and impact on profitability of strategic actions to consolidate its domestic automotive operations and expand its position in Europe. Results were also affected by the difficulties suffered by the vital fluids operation. In the first quarter of 2005, Lydall’s filtration/separation segment sales declined compared with the same quarter of 2004 while its thermal/acoustical segment sales increased slightly, with all businesses in that segment contributing to growth.

Commenting on current market conditions was David Freeman, Lydall president and CEO. “The global nonwovens industry is a very dynamic and competitive landscape. Lydall’s ability to differentiate itself relies heavily on rapid identification and execution of optimized solutions for ever-evolving filtration and thermal/acoustical applications.”

Another core strategy has been geographic expansion, which has been the focus of much of Lydall’s capital investments over the past two years. In 2004, the company constructed a state-of-the-art automotive thermal/acoustical plant in Saint-Nazaire, France. The new facility, which was officially opened in September 2004, is strategically located to complement its operations in Germany, enabling the company to service all major European automotive manufacturers. According to company reports, the new operation is meeting expectations and doing well.

Lydall is also looking to expand its non-automotive businesses geographically. “Building on our worldwide base for filtration products as well as exploring geographic growth opportunities for active and passive thermal/acoustical product lines will be an important focus in the years ahead,” predicted Christopher Skomorowski, executive vice president and COO.

Currently the company runs operations in New Hampshire, North Carolina, New York, Vermont and Virginia as well as in Germany and France. Lydall also operates sales offices throughout the U.S., Europe, and Asia. The company supplies products worldwide, particularly its active thermal control units and nonwoven air filtration media and cryogenic insulation products.

Acquisitions have also played an important role in Lydall’s growth, although recently the company has been internally focused, dealing with restructuring and optimizing operations. Looking ahead, Lydall considers itself in acquisition mode and plans to concentrate on relatively small, profitable opportunities to augment existing non-automotive products and technologies.

In the area of new products, during 2004 Lydall recorded a 28% rise in sales of products introduced within the previous three years. “The continuous flow of new products and the introduction of existing technologies into new markets have always been key drivers of our growth,” stated Mr. Freeman. “Also, we are committed to leveraging our breadth of technology. Although Lydall is a portfolio of diverse businesses, conceptually we are ‘One Lydall.’”

He added that the company’s strategy to encourage each business to share technology and application expertise is beginning to generate new market opportunities and internal cost-management benefits. For example, Lydall’s automotive heat shield technology is being applied to its industrial applications, and its internal collaboration on fiber processing technology is enabling the company to address new opportunities in its filtration business.

Similar to several other leading roll goods producers, Lydall expects its Lean Six Sigma initiative to benefit future growth. “Management of costs and improved efficiencies at our operations are essential to realizing Lydall’s underlying profit potential,” remarked Mr. Freeman. “We are focusing on ‘lean’ at all our locations, including the corporate office. We are looking at everything we do and are identifying ways to do it better.”

Mr. Freeman also emphasized the important role played by Lydall’s individual businesses, each of which has its own Mission and Vision Statements and priorities for 2005. “These, although as diverse as the businesses themselves, have a common focus, which forms our corporate road map. Lydall’s Mission is to provide sustainable, long-term benefits for all our stakeholders, which exceeds their expectations. To achieve this we will focus on growth markets, on developing our people and on operating excellence.”

Mr. Freeman added that Lydall’s Corporate Vision is to achieve double-digit, quality growth though a focus on growing markets in which it has expertise as well as through organic growth supplemented with acquisitions. “All our business segments have their role to play in realizing these goals.”

Lydall has also continued to strengthen R&D efforts and increased its investment in new product development by 17% in 2004, supporting a continuous flow of new products. Specifically in the nonwovens automotive market, the company has introduced two new products-DbCore (gradient density) and PolyTack ZeroClearance. Gradient Density DbCore is a lightweight, recyclable acoustical barrier with enhanced noise abatement characteristics capable of tuning out specifically targeted noises. This product is currently employed as a dash insulator on a number of pick-up truck models. PolyTack Zero­Clearance is an extension of its ZeroClearance product line that includes shields that adhere via a unique, high-temperature, pressure-sensitive adhesive to a variety of hot spots on the underbody of vehicles. The PolyTack shield is specifically designed to adhere to and insulate plastic (HDPE) components such as plastic gas tanks.

Lydall’s thermal/acoustical segment also includes industrial thermal products. In this area, the company is introducing passive insulating systems into the appliance market. In an effort to provide customers with an in-depth analysis and understanding of their requirements and develop the best solution for their specific application, Lydall has developed a customized suite of multidimensional investigative tools specific to the appliance industry.

Leveraging its strengths to realize opportunities has been a key theme for Lydall. Going forward, the company’s focus will continue to be primarily on the introduction of existing technologies into new markets. “Our strengths,” said Mr. Freeman, “lie in our breadth of technology, our ability to form strategic alliances, our plans for geographical expansion, our innovation, and, at the heart of everything, the knowledge and experience of our people.”

Strong growth was the key to success in 2005 for Lydall Inc., Manchester, CT. The company’s nonwovens sales reached $113 million, which represents an increase of 12% from 2004. During 2005, Lydall instituted major operating improvements, strengthened its operating and marketing management and integrated the production of a sizeable amount of new automotive business.

“Lydall’s progress in 2005 was primarily attributable to our automotive businesses, particularly in Europe,” commented David Freeman, Lydall president and CEO. “Our filtration and vital fluids businesses, however, had a difficult year. During the first quarter of 2006, our air filtration business continued to face a price-competitive market as well as higher manufacturing costs. The vital fluids business showed some improvement.”

Lydall’s largest business segment continues to be thermal/acoustical applications, which represents approximately 69% of total sales. This segment includes automotive, passive thermal and active thermal businesses. Making up approximately 21% of total sales, the filtration/separation segment includes air and liquid filtration and vital fluids businesses. Other products and services, which is primarily comprised of its transport business, represents about 10% of total sales.

In describing current filtration/separation market conditions, Mr. Freeman said that the market, particularly for air filtration products, has become increasingly price competitive, especially in light of rising raw material and energy costs. “In response, Lydall is focusing on value-added product development to meet unique industry needs.”

Lydall’s recent efforts to consolidate domestic automotive operations and expand its position in Europe were successful, according to Mr. Freeman. “We completed the consolidation, increased sales and strengthened management of our North American operations. These operations are well-positioned for future growth and further improvements,” he said. The company’s Lean programs, particularly Lean Manufacturing, are a key factor as is a strengthening collaboration between its European and North American operations.

During 2005, European automotive sales increased and operating income grew significantly, according to Lydall. The company made substantial gains in operating efficiencies in Germany and benefited from a successful first year of operation at its St. Nazaire, France facility. Both North American and European operations are continuing to improve operating efficiencies and growing sales in 2006.

In terms of capacity upgrades, no major expansion plans for this year are being reported. “Significant capital has been invested in the past two years, both here and in Europe, related to our automotive businesses. We are anticipating lower capital spending in 2006 compared with 2005,” offered Mr. Freeman. “We believe that we are well positioned for growth as a result of the capital invested during the past couple of years. This investment has been key to the growth of our automotive business. We’re not expecting any out-of-the-ordinary capital requirements by any of our facilities this year.”

In its passive thermal business sector, Lydall is building on its initial successes in the appliance market, an area about which the company is very enthusiastic. This business is also exploring certain cross-marketing opportunities with other Lydall operations.

In its active thermal operation, which manufactures and markets Affinity temperature-control units, Lydall is stepping up development efforts of next-generation products for the semiconductor market. “We are also exploring the viability of outsourcing basic manufacturing of these products so we can concentrate on our strengths in this area, which are exceptional service and customization.”

The company has also strengthened its marketing force, which focuses on air and liquid filtration. “We expect this to be an area of growth. Both air and liquid filtration businesses are working closely with customers to meet their needs and to provide innovative products and value-added offerings,” Mr. Freeman remarked.

In the vital fluids business, Lydall has changed its approach to the market for its bioprocessing product lines and brought all selling activities in-house. “We are beginning to see progress as a result. All Lydall businesses are concentrating on operational excellence to counter erosion of gross margins and guarantee the highest level of quality,” said Mr. Freeman. He added that the company remains committed to its Lean Six Sigma program as a powerful tool to accomplish these objectives.

As for its globalization strategy, Lydall sells its filtration/separation and passive and active thermal products worldwide. The company currently sells to the North American and European automotive markets. “We are making progress gaining Asian transplant business.”

Wrapping things up, Mr. Freeman pointed to manufacturing excellence as Lydall’s major focus and said that its Lean Six Sigma programs are expected to significantly improve its bottom line. “Our priorities for 2006 are to increase accountability and to continue focusing on management development. We expect to improve gross margins, and we are concentrating on how we allocate and manage our capital resources. Most importantly, we are driving value-added product development throughout our businesses.”

For Lydall Inc., Manchester, CT, worldwide 2006 nonwoven sales topped the $136.7 million mark, representing a slight drop from last year’s $137.8 million total and 42% of Lydall’s company-wide 2006 sales, which reached $326.4 million.

“This improvement in large part reflects the cumulative benefits being realized from our Lydall Lean Six Sigma (LLSS) program,” commented David Freeman, president and CEO. “LLSS gained traction during 2006, our first full year under the program. More than 100 employees were trained during 2006 and well over that number have received training during the first half of 2007.”

At the same time, Lydall is increasing focus on product development. New product sales exceeded 20% of its total in 2006 and this percentage is expected to rise to 25% during the next couple of years.

Thermal/Acoustical segment sales accounted for approximately 67% of Lydall’s business last year, with the majority of this segment being comprised of automotive sales, while the Filtration/Separation segment accounted for approximately 24% of total 2006 sales. The majority of Lydall’s nonwovens sales target high-efficiency air and liquid filtration applications. Lydall’s nonwoven thermal/
acoustical products serve demanding building, cryogenic and high-end appliance applications. Lydall also manufactures nonwoven products employed in certain medical devices and as acoustical insulation in high-performance automotive applications.

Geographically speaking, Lydall’s business covers both Western and Eastern markets with foreign and export sales representing 43% of the company’s net sales in 2006. Export sales are primarily to Europe, Asia, Mexico and Canada. In the U.S., Lydall has operations in North Carolina, Vermont, New Hampshire, New York and Virginia; it also operates manufacturing facilities in Germany and France as well as sales offices in the U.S., Europe and Asia.

Patrick Apfeld, vice president of marketing and business development for Lydall Filtration/Separation, described the filtration/separation market for nonwovens as healthy and growing faster than baseline GDP. “Some segments, particularly those related to consumer products, have become commoditized, and there has been some capacity rationalization and consolidations as a consequence,” he explained. “Lydall generally participates in a fairly narrow market space. We provide highly technical products to demanding niche business-to-business markets.”

Lydall Filtration’s strategy is to increase focus and development toward markets that require joint application development (with customers) and technical innovation. “Lydall Filtration has differentiated itself through world-class customer service, the customization of products for specific needs and by broadening the offerings beyond wetlaid microglass to include high-end, filtration-quality meltblown products and a range of composite materials.”

Speaking of wetlaid nonwovens, according to Reid Anthony, director of Lydall’s engineered nonwoven/technical paper business serving thermal and acoustical applications, suppliers have expanded their asset bases rather than decommission legacy assets and, in turn, have reassigned equipment to wetlaid products for building and cryogenic end uses. “The success of these ‘specialty businesses’ and the relative margin differential has subsequently attracted additional investment,” he said. “Specialty businesses, originally created for asset utilization, have become growth engines. From a competitive standpoint, we are seeing new entrants from Asia as well as vertical integration and consolidation of existing players. Lydall’s breadth of technology—meltblown, airlaid, wetlaid, composite and needling capabilities—distinguishes us in this growth industry.”

By way of capital improvements, Lydall is in the second year of a multi-year capital improvement plan at both its Rochester, NH and St. Rivalain, France filtration/separation facilities. These improvements include a series of proprietary process improvements aimed toward achieving unsurpassed filtration properties in microglass products and state-of-the-art wet-forming hardware and process control upgrades to support product uniformity.

Additionally, Lydall recently installed a new advanced laminating line at its Rochester, NH operation, expanding its technical capabilities and providing sufficient capacity to cover current composites demands and future growth for several years. The laminating line is a key process in the manufacture of the LydAir SC, LyPore SC as well as a growing portfolio of customized composite product lines, which are utilized in high performance filtration challenges including industrial and residential HVAC, gas-turbine, cabin air, drinking water and a variety of industrial fluid applications.

The Lydall Automotive Group is also investing in additional nonwovens capacity at its Hamptonville, NC facility to support substantial growth in acoustic products. Installation is scheduled for the second half of 2007 and will accommodate new business. It is scheduled to come onstream in early 2008.

“Continuing investment in proprietary process improvements for all our businesses will allow us to solidify marketshare in core markets and support expansion into demanding new applications,” Mr. Freeman said.

Lydall is also committed to expanding geographically and is establishing a commercial presence in China, where the company has leased warehouse space for filtration products. “Our goal is to set up a sales and service company with the capability of performing finishing operations in addition to acting as the central distribution and service facility for filtration products for Asia. We also intend to expand our presence for thermal/acoustical products in this important market,” Mr. Freeman said.

Wrapping up, Mr. Freeman said that Lydall plans to continue to concentrate on strategic sales growth and margin improvement. “We will remain focused on operating efficiencies, resource allocation and new product development. Our vision is to grow at a double-digit compound annual rate. With an expected organic growth rate in the single digits, acquisitions will be key to achieving our goal.”

Under the leadership of its new president and CEO Dale Barnhart, Man­chester, CT-based Lydall has reorganized its internal structure into two key reportable sectors—Thermal/Acou­stical and Performance Materials. In 2007, the company’s overall sales were $339 million, a 4% increase over the prior year, of which 32% were nonwoven roll goods.

Following its first quarter 2008 restructuring efforts, Lydall’s Ther­mal/Acoustical segment consists of the company’s automotive businesses, while the Performance Materials segment makes up the filtration businesses and the industrial thermal insulation business, formerly the passive thermal business and specialty products. All other businesses are aggregated in Other Products and Services (OPS), which comprises the company’s vital fluids business, Affinity temperature control equipment business, formerly the active thermal business, and the transport, distribution and warehousing services ﻿felts that are going to be needed for the surge of new power plants and other high temperature applications for filtration. The new line is Southern Felt’s seventh, adding 375,000 linear yards of needlepunch felt for the filtration market monthly.

“The plant expansion and the latest filter felt production line have enabled Southern Felt to satisfy increased volume demands and to manufacture more efficiently as individual lines can be dedicated to individual products with consequent gains in manufacturing efficiency and process waste reduction,” Mr. Grover explained.

Next on Southern Felt’s agenda is the installation of a new chemical impregnation line—a $2 million investment—as well as another new filter felt line being planned for 2010. The new filter line will require a plant expansion at Southern Felt’s South Caroline facility to not only house the equipment but to also increase warehousing capabilities.

The South Caroina site has become the sole North American facility for Andrew Industries after the company down its Slater Felt facility in Missouri and relocated this business to the Southern Felt site. The closure follows the shut down of Andrew divisions Eastern Felt and Northern Felt, in Rhode Island and Canada, respectively, during the past five years. These operations also were consolidated into Southern Felt.

Three years ago, Andrew expanded into China to chase baghouse filter applications in this region’s growing power plant market, as well as other filtration applications in this part of the world. The original high speed needlefelt line located in Quinpu, Shanghai is already running around the clock at full capacity and a second line is set to come onstream before year’s end. Mr. Grover described this line as “the most modern, highly productive and fully automated filter felt line in the world.”

Also a part of its operations is a U.K. subsidiary, where two business units, Andrew Textile Industies and Webron Marling, were consolidated in 2006 to form one division—Andrew Webron Industries. “Consolidation has been a great help to this business, which is now constrained by its manufacturing volume capacity following significant in­crease in demand for its products because of better sales and marketing,” said Mr. Grover, adding that additional manufacturing capacity is being planned to resolve this situation.

Beyond filtration, Andrew Industries does have some focus but executives do not anticipate it will become more important to the company because filtration remains its core and primary interest. Andrew’s subsidiary Bondex, Inc. in the U.S. manufactures lightweight calendered nonwovens between 20 and 100 grams per square meter. It anticipates significant growth outside the filtration sector but it is too soon to be more specific about these opportunities at this time.

Meanwhile, outside of the nonwovens operation, Andrew’s Business Machine Products (BMP) Division continues to be very successful. The use of needlepunch nonwovens in the BMP Division’s traditional markets has declined somewhat but deliberate attempts to enter new markets that use needlepunch nonwovens has been successful especially in the home appliance sector, according to Mr. Grover.

Looking forward, Mr. Grover is confident that growth will continue because of what his company has to offer as well as the resources it has developed to fuel its business. Other factors that will play a role will be a growing presence in India and in the southern hemisphere as well as maintaining significant investment in all areas of product development.

“Right now we are having a deliberate period of consolidation so as not to put too much strain on our financial and managerial resources and in anticipation that global economies have to reflect some caution over the immediate future,” he added.

During 2008 Lydall made significant changes to its structure to strengthen its core businesses. Lydall began to implement a strategy to understand the growth markets served within Lydall’s businesses and match the underserved market needs with Lydall’s capabilities. “We are focusing on markets that have higher growth rates and products that we expect will generate higher gross margin percentages for us in the future,” commented CEO Dale Barnhart.

The four pillars of Lydall’s growth strategy include: organic growth from new product development; geographic expansion into Asia and Europe; Lydall Lean Six Sigma (LLSS) to continually improve operating performance resulting in revenue and income growth; and acquisition of product lines and/or businesses that participate in identified growth markets.

At the consolidated level, overall sales at Lydall for 2008 were $306 million, of which 23% were nonwoven roll goods. At $112 million, Performance Materials segment sales increased by $3 million in 2008 compared to 2007. Contributing to this increase were higher net sales of industrial thermal insulation products of $1 million, partially offset by a decrease of $0.5 million to $70.5 million in net sales of filtration media. As result of the global economic downturn, many of Lydall’s filtration customers adjusted downward their production schedules and the amount of products purchased from the company in order to reduce their current levels of inventory.

Within Lydall’s Industrial Thermal Insulation business, sales hit the $41 million mark in 2008, an increase resulting from increased energy and industrial products sales and partially offset by a drop in demand for building and appliance insulation products. Sales for energy and industrial products increased due to strong demand in the electrical markets as well as increased net sales to manufacturers of cryogenic equipment for liquid gas storage and transportation. Due to an economic recession in the U.S. impacting the new home and commercial buildings construction markets, the company’s sales of building and appliance insulation products decreased during 2008.

In terms of capital investments at its Performance Materials Segment, Lydall is purchasing new equipment to enhance engineered products for the appliance industry. “We expect this equipment will allow us greater design flexibility, resulting in access to new markets for our appLY Mat appliance insulation product,” said Mr. Barnhart. He added that new product line extensions of appLY Mat are enabling Lydall to penetrate both thermal and acoustical applications in residential and commercial appliances. Beyond capital improvements, Lydall is also expanding its business through acquisition activity. As a result of its purchase of DSM Solutech B.V. last year, Lydall’s portfolio now includes Solupor specialty microporous membrane technology, which has been integrated into its Performance Materials business. The first product developed from Solupor is Arioso, a high performance air filtration composite media that offer durability, high permeability and chemical inertness.

“Arioso has generated a tremendous amount of interest from our existing customers as well as from potential customers in new markets,” commented Mr. Barnhart. Arioso expands Lydall’s product offerings in its established high purity air markets and provides a competitive advantage in other sectors such as dust collection, air pollution control, respiratory face masks and vacuum cleaners.

In commenting on Lydall’s acquisition of DSM Solutech, Mr. Barnhart said that Lydall “will pursue an acquisition opportunity when it aligns with our strategic roadmap. Adding high performance products like membranes to our portfolio was a perfect fit with our technology plan. Solupor has a number of unique attributes that differentiate it from other membranes due to its structure that is similar to a nonwoven.”

In fluid power and transportation filtration markets, Lydall is advancing current performance boundaries of microglass media with the introduction of LyPore Defender hydraulic and lube grades and LyPore Unity coalescing grades. “The main goal with both product lines is to deliver extended filter life, which results in product differentiation for our customers and cost savings for their customers,” explained Mr. Barnhart.

In the life science area, LyPore Clarity is Lydall’s new product line of binderless microglass media used for lateral-flow diagnostics testing and laboratory/analytical markets that demand purity, consistency and reliability.

As for its Thermal/Acoustical business, Lydall is underway with plans to close its St. Johnsbury, VT manufacturing facility and consolidate its North American automotive parts production into its Hamptonville, NC operation. The consolidation is expected to reduce operating costs significantly, increase efficiency and enhance the company’s competitive position while maintaining essentially the same level of manufacturing capacity. The company commenced the transfer of equipment and production in the first quarter of 2009 and is currently substantially complete with the consolidation. Beginning in the latter part of 2009, Lydall expects to start to benefit from reduced fixed overhead and selling, product development and administrative expenses as a result of the consolidation.

With many of its key customers reporting year-over-year revenues down 20-25% between 2008 and 2009, Lydall Performance Materials certainly was not immune to the global recession. In 2009, the Manchester, CT-based company reported sales fell 12% from $111 million to $98 million.
Despite these challenges, Lydall was able to remain profitable. “We have differentiated technologies which the market continues to demand even in difficult economic conditions,” said CEO Dale Barnhardt. “That, coupled with the fact that over half of our sales is replacement business, gave us the volume we needed to remain profitable throughout the downturn.”
So far, 2010 has been all about recovery. For the first quarter, sales increased 21% to $27.2 million. This was largely brought on by an increase in order backlog from $34 million in December 2008 to $56 million in March 2010. “Time will tell if this is long-term recovery or an inventory correction,” Mr. Barnhardt said. “Our businesses are not recession proof, but as we continue to develop differentiated technologies in attractive markets, we will be best positioned to weather economic downturns.”
Lydall’s Performance Materials segment served diverse markets including filtration media solutions for air, fluid power, industrial and life science applications and industrial thermal insulation solutions for building products, appliances and energy and industrial markets.
A key focus of its business—which has profited greatly from diversity—is new product development. In fact, much of the company’s organic growth has been fueled by a combination of product extensions, along with applying new materials and process technologies as a vehicle to bring innovative new products to currently served markets.
A good example of this is Arioso composite media, which provides many additional features that allow us to explore markets and applications outside those traditionally served by Lydall. In power generation, air pollution control and dust collection, this new media technology is gaining acceptance for applications including gas turbine air intake, dust collection cartridges and bag filters.
Lydall to some extent obtained the means necessary to develop this product through the launch of microporous membrane technology, which was acquired from DSM Solutech B.V. Since the acquisition in late 2008, Lydall has focused on expanding the company’s Solupor specialty microporous membranes into new markets, which resulted in the Arioso launch, Mr. Barnhardt said.
Another recent filtration-related launch, LyPore Defender-C microglass filtration media series designed to achieve maximum filtration performance while eliminating static discharge in hydraulic, lube oil and fuel systems filtration processes. LyPore Defender-C is an extension of the Lypore Defender filter media series introduced in 2008, which is known for its superior dirt holding capacity and longer filter life.
Additionally, the company has developed biosoluble high temperature fiber products to expand Lydall’s high temperature technology portfolio and supplements the Lytherm product brand, traditionally utilized in the industrial market for kilns and furnaces used in metal processing.
“Our current Lydall Performance Material business model is to supply technically advanced products to global markets from our four manufacturing sites in the U.S., France and the Netherlands,” said Mr. Barnhardt. “We have increased our global reach through the deployment of regional sales forces, distributors and agents as appropriate. Lydall continues to review various strategic and business opportunities to grow the business in developing regions.”
Noting that the segment has no plan to expand its manufacturing footprint currently, Mr. Barnhardt said that such a move would be considered down the road.
Last year, Lydall was in expansion mode, however, when it added a new needled fiber operation to is Green Island, NY facility, a move that has allowed it to expand its range of high temperatures, insulation products. Among the products made on the line are appLY Mat needled fiberglass products and Manniglas thin nonwoven fiberglass products, which together allow Lydall to be a full-service insulation partner to industry OEMs. Lydall has also been addressing the expansion of appLY mat product portfolio with the incorporation of different fiber types, further expanding the product’s scope in new and existing market segments.
In other investment news, Lydall has been busy upgrading the quality and capability of its flagship wetlaid nonwovens line in Green Island, NY. This line will be increasingly focused on serving the filtration market with both microglass and synthetic fiber grades in addition to supporting new thermal insulation grades.
Speaking of thermal insulation products, this business was also negatively impacted in 2009 by the economic downturn, but here market diversity was also beneficial. “The government stimulus packages for new energy efficient appliances and tax credits for first time home buyers definitely helped to create the demand for new appliance production, hence the need for high temperature insulation,” Mr. Barnhardt said. “The demand for commercial building materials continues to lag; however, OEM product diversity has worked out well for us.”
In addition to diversity, Lydall remains on the cutting edge of technology in all of its markets by staying extremely close to its customers, understanding their processes and evolving application requirements all focused on setting the highest standard for products, services and support.
In filtration, Lydall believes that growth will be driven by demand for higher efficiency and lower pressure drop filtration systems. “Increasingly, we see escalating efficiency requirements for existing applications as well as the adoption of higher performing filtration systems in new applications, particularly those related to ‘quality of life,’” Mr. Barndhardt concluded. “We believe that worldwide increasing demand on energy supply will spur the development of increasingly lower pressure drop filtration technologies.”

Major Markets: Specialty insulation, high-efficiency air and liquid filtration media

Executives at Lydall continue to be encouraged by the long-term opportunities within the company’s Performance Material segment. Net sales in this segment increased by 9% to reach a record $134 million in 2011.

Particularly strong was the industrial thermal insulation business, which was driven by global demand for capital project investments in the cryogenic and thermal and insulation markets, according to executives. Within the Industrial Filtration business, Lydall is partnering with one of its customers to market Arioso membrane, which will enable the product to make significant gains in market acceptance.

Opportunities for Lydall are mainly driven by markets engaged in product and technology development that are demanding higher levels of filtration performance. Additionally, opportunities exist for geographic expansion in filtration and insulation in regions including Eastern Europe, South America, India and China. These regions continue to invest in infrastructure improvements and demand more from their filtration and insulation applications.

In new product news, Lydall’s Arioso high performance air filtration composite media was chosen as the premium filter media in a range of high efficiency fume extraction filters being produced by a prominent filter manufacturer in the U.K. Fume extraction filters are used to remove fine particulate matter that is contained in smoke and fumes generated by laser/plasma cutting and welding operations. The filters engineered with Arioso are designed to remove even the finest particles to provide cleaner air discharge in the workplace and the environment.

New product development has always been a priority for Lydall Performance Materials across all of its market segments. In filtration and separation, the company offers LyPore and LyPore Defender microglass media and LyPore Unity, a microglass series that is optimized for coalescing. More specifically, in air and industrial filtration, LydAir microglass media and Arioso high performance composite filtration media are both critical components of clean-air systems in a number of areas. Meanwhile, Lydall’s filter media for the biopharmaceutical, medical, food and beverage, specialty process and drinking water industries include microglass, meltblown and synthetic grades for removing particles ranging from bacteria to large sediment. Lydall recently expanded its Solupor membrane series, which is based on ultra-high molecular weight polyethylene. These new grades perform at high flow rates in venting and air/gas line filters.

In personnel news, in July, David Williams was named president of the Performance Materials business. Before joining Lydall, Williams held a 20-year tenure with Saint-Gobain, a building materials company and leading producer of high performance materials and glass containers.

Major Markets: Specialty insulation, high-efficiency air and liquid filtration media

Sales in the performance materials segment of Lydall Inc. decreased $16 million, or 12%, to $118 million in 2012 due to lower volumes and the negative impact of foreign currency translation. Part of the reduction in sales was attributed to the sale of an electrical papers product line in 2010 as well as decreased demand in certain commercial building products markets.

Industrial filtration products decreased 6.2%, or $4.5 million, due to a reduction in demand for the materials in Europe and Asia. Sales of life science filtration products decreased due to decreased demand for products used in water and life protection application products.

Opportunities for Lydall are mainly driven by markets engaged in product and technology development that are demanding higher levels of filtration performance. Additionally, opportunities exist for geographic expansion in filtration and insulation in regions including Eastern Europe, South America, India and China. These regions continue to invest in infrastructure improvements and demand more from their filtration and insulation applications.

In new product news, Lydall’s Arioso high performance air filtration composite media was chosen as the premium filter media in a range of high efficiency fume extraction filters being produced by a prominent filter manufacturer in the U.K. Fume extraction filters are used to remove fi ne particulate matter that is contained in smoke and fumes generated by laser/plasma cutting and welding operations. The filters engineered with Arioso are designed to remove even the finest particles to provide cleaner air discharge in the workplace and the environment.

New product development has always been a priority for Lydall performance materials across all of its market segments. In filtration and separation, the company offers LyPore and LyPore Defender microglass media and LyPore Unity, a microglass series that is optimized for coalescing. More specifically, in air and industrial filtration, LydAir microglass media and Arioso high performance composite filtration media are both critical components of clean-air systems in a number of areas.

Meanwhile, Lydall’s filter media for the biopharmaceutical, medical, food and beverage, specialty process and drinking water industries include microglass, meltblown and synthetic grades for removing particles ranging from bacteria to large sediment.

Lydall recently expanded its Solupor membrane series, based on ultra-high molecular weight polyethylene. These new grades perform at high flow rates in venting and air/gas line filters. Within specialty insulation, Lydall products include Manniglas fiberglass papers, appLY Mat needled fiberglass mats, Biotherm biosoluble ceramin paper and Lytherm ceramic paper for a variety of cavity, gasket, sealing and surface protection applications in the home appliance, industrial HVAC, energy and petrochemical markets.

The acquisition of the baghouse filtration media manufacturer businesses of Andrew Industries, which is now known as its industrial filtration business, was the big news for Lydall, Inc. this year. Closed in February 2014, the acquisition should add more than $130 million in sales to the company’s performance this year.

With manufacturing sites in South Carolina, the U.K. and China, the acquired filtration businesses broadens Lydall’s portfolio into new areas while also giving it an Asian presence.

There are a lot of complements between the acquired and existing business both on filtration and automotive, but the acquisition was described as adjacent to existing businesses as Lydall was not previously participating in the industrial air filtration market.

The acquired business’ main product is a needlepunch nonwoven for industrial air filtration. In 2013, the company’s sales were $127 million.

In addition to adding to the company’s filtration offerings, the acquisition of the Andrew industrial filtration businesses gave Lydall additional capacity in South Carolina and provided it with new manufacturing assets in the U.K. and China. Prior to the purchase, Lydall had a strong North American presence as well as a Western European business served through plants in France and the Netherlands.

Growth in both new and existing markets is a focus for the company, and while the purchase will help the company grow in new markets and new geographies, a growth strategy is also a focus in Lydall’s existing businesses. In 2013, the existing nonwovens businesses sales were split into two separate divisions—Performance Materials, containing wetlaid operations targeting filtration and insulation applications, and Thermal/Acoustical Fibers, a polyester–based needlepunch technology, primarily serving the automotive market.

Together the two divisions reported sales of $226 million. While results in the performance materials business were down year-over-year due to the divestment of one of its products lines, thermal/acoustical fibers sales were up about 20% due primarily to the strength of the automotives market in North America and Lydall’s ability to win new platform awards

While filtration is certainly a strong business for Lydall from a strategy perspective the company was more heavily weighted in automotives before acquiring the Andrew industrial filtration businesses. However, the focus is to try and grow the filtration side of the business, which is seen as more stable and more likely to grow over the long term.

In March, Lydall improved its filtration operations with the addition of a small wetlaid line in Rochester, NH. Described as a minimill, this state-of-the-art line, dedicated primarily for smaller runs, offered benefits like a faster start up, increased efficiency and better flexibility. This will help Lydall cater to the life science markets where many applications have smaller batch sizes. The line can provide customers with products in an efficient manner and allows Lydall to hold research and development and testing trials without monopolizing its existing assets.

Meanwhile, in the thermal/acoustical area, where Lydall provides a lightweight, structural material, the company saw better than 20% growth in 2013 due largely to the strength of the North American automotive markets. Here, Lydall’s products act as acoustical barriers in products like belly pans, wheel well liners and dashliners.